What is a LOT

There are several types of lots available to trade that are classified according to size.

These lot sizes are defined in generic unit terms because the specific currency represented by the units depends on which currency pair is traded. For example, if a standard lot of EUR/USD is traded, it would be 100,000 euros. In contrast, if it was a standard lot of AUD/JPY, the lot size would be 100,000 Australian dollars.

It is vitally important that a trader chooses a lot size that is appropriate to that trader’s account size and risk tolerance. The lot size chosen by the trader affects virtually all other aspects of trading. This is because of the massive amount of leverage available in foreign exchange trading which therefore can be viewed as a double edged sword.

Due to leverage in Forex a small amount of funds controls a significantly larger amount of funds and therefore can certainly serve to magnify profit potential. But on the other hand, the amount of risk inherent in highly leveraged trading like this is equally magnified.

Therefore, it is advisable to use caution when trading with the substantial leverage common in Forex trading. Highly leveraged trading is aggressive trading that is characterized by both high risk and high potential reward and potential new Forex traders should be aware of the above points.

Risk warning: Please note that trading in Forex and other leveraged products may involve a significant level of risk and is not suitable for all investors.

CFD's are leveraged products. Trading in CFD's related to foreign exchange, commodities, financial indices and other underlying variables carry a high level of risk and can result in the loss of all of your investment. As such, CFD's may not be suitable for all investors. You should not invest money that you cannot afford to lose. Before deciding to trade, you should become aware of all the risks associated with CFD trading and seek advice from an independent and suitably licensed financial advisor. Under no circumstances shall Mega Trader FX Ltd and/or Trading Point of Financial Instruments Ltd have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to any transactions related to CFD's or (b) any direct, indirect, special, consequential or incidental damages whatsoever. Past performance pertaining to trading in CFD's related to foreign exchange, commodities, financial indices and other underlying variables is not a reliable indicator of future performance. Content on any websites operated by Mega Trader FX Ltd and/or Trading Point of Financial Instruments Ltd does not contain advice or recommendations by or on behalf of Mega Trader FX Ltd and/or Trading Point of Financial Instruments Ltd. The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

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